DIRECTORS REPORT Your Directors are pleased to present the seventh Annual Report and Audited Accounts for the financial year ended March 31, 2015. This Report and Audited Accounts for the Year ended 31st March, 2015 are being presented for the first time after demerger of Lubricants Business of earlier Gulf Oil Corporation Limited into the Company with Appointed Date 1st April, 2014, as per Scheme of Arrangement between Gulf Oil Corporation Limited ("Transferor Company/ Demerged Company/GOCL") and Gulf Oil Lubricants India Limited ("Transferee Company" / "Resulting Company" / "GOLIL"/"Company"") and their respective shareholders and creditors. Hence, the financial results for the year 2014-15 are not comparable to the previous year figures. PERFORMANCE HIGHLIGHTS: Demerger of lubricants business (w.e.f. 01st April 2014) with the vision of creating a pure play stand alone separately listed Lubricant Company i.e. GOLIL has turned to be a step in the right direction and has unlocked a significant value for the Shareholders. The lubricants business in form of a separate entity has continued to tread on a growth trajectory by outperforming the industry and has delivered a Net Revenue growth of 12.2% and growth in Profit before tax of 13.6% for the year over the last financial year. Net Revenues for the year 2014-15 was Rs. 96,748.17 Lakhs as compared to Rs. 86,261.09 Lakhs in the previous year and Profit Before Tax was Rs. 11,603.88 Lakhs (Rs. 10,216.32 Lakhs in the previous year) as Lubricants Division. Company's EBIDTA has shown a healthy growth of 21% YoY with EBIDTA margins at 13.6%, an improvement of 100 bps for the year over previous year for Lubricants business. Profit After Tax for the year was Rs. 7,740.96 Lakhs resulting in an Earnings Per Share (EPS) of Rs. 15.62 for the year. Performance highlights are discussed in detail in the Management Discussion and Analysis enclosed as Annexure A and forming integral part of this Report. 2 DIVIDEND: During the year, the Board at their meeting held on September 25, 2014, declared an Interim Dividend of Rs.2/- per share i.e. 100% of the Face Value of the Equity Share. The said Interim Dividend was paid to all eligible shareholders on October 17, 2014. The Board has recommended a final dividend of Rs. 3.50 (175% on the Face Value of Rs. 2 per share) per equity share for the year 2014-15. The final dividend of Rs. 1,735.04 Lakhs, if approved by the Shareholders at the ensuing Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on the date of the Book Closure. With this, the total dividend for the full year 2014-15 shall stand at Rs. 5.50 per share ( 275% on Face Value of Rs.2/-). 3 SCHEME OF ARRANGEMENT AND LISTING OF SHARES: The Hon'ble High Court of Andhra Pradesh, vide its order dated April 16, 2014 has approved the Scheme of Arrangement between Gulf Oil Corporation Limited ("Transferor Company/Demerged Company/GOCL") and Gulf Oil Lubricants India Limited ("Transferee Company" "Resulting Company" / "GOLIL"/"Company"") and their respective shareholders and creditors. The Scheme provided for demerger and transfer of the Lubricants Undertaking of Gulf Oil Corporation Limited to Gulf Oil Lubricants India Limited, w.e.f. April 1, 2014 (the appointed date under the Scheme) pursuant to Section 391 to 394 read with Sections 78, 100 to 104 of the Companies Act, 1956. Upon filing the Order of the High Court with the Registrar of Companies at Hyderabad, the Scheme became effective on May 31, 2014. Pursuant of Scheme of Arrangement, shareholders of GOCL have been allotted 1 (one) fully paid equity share of face value Rs. 2/- each in Gulf Oil Lubricants India Limited for every 2 (two) equity shares held in GOCL and simultaneous effect was given to capital reduction / reorganization in GOCL by allotting 1 (one) new GOCL fully paid equity share of face value Rs.2/- each for every such two old GOCL shares. These GOCL and GOLIL shares have been issued and allotted on June 12, 2014 to the eligible shareholders of GOCL whose names appeared on the Register of Members as on the Record Date i.e. June 5, 2014. New share certificates of GOLIL have been dispatched to all the Shareholders on June 18, 2014 and dematerialsed shares have been credited to the demat accounts of the shareholders by Central Depository Services India Limited on June 20, 2014 and National Securities Depository Limited on June 21, 2014. The Company has been admitted for listing and trading on BSE Limited (BSE) and National Stock Exchange India Limited (NSE) with effect from July 31, 2014. 4 SHARE CAPITAL: During the year, the Authorised share capital has increased to Rs. 9,96,44,980/- divided into 4,98,22,490 equity shares of Rs. 2/- each from Rs. 5,00,000/- divided into 50,000 equity shares of Rs.10/- each, pursuant to the Scheme of Arrangement. Further the Company allotted 4,95,72,490 equity shares of Rs.2/-each on June 12, 2014 and the earlier paid-up capital of Rs.5,00,000 divided into 50,000 equity shares of Rs.10/- were cancelled pursuant to the scheme of arrangement . For details of share capital of the Company, please refer Note 2 to the Financial Statements. Subsequent to the year end, with effect from May 13, 2015, the authorized share capital of the Company further increased to Rs. 10,46,27,228 divided into 5,23,13,614 equity shares of Rs.2/- each. 5 REGISTERED OFFICE OF THE COMPANY: Subsequent to the year end, the approval of the Shareholders was obtained on May 13, 2015, through Postal Ballot process for shifting of Registered Office of the Company from Hyderabad, State of Telangana to Mumbai, the State of Maharashtra. The approval of Regional Director was received on July 3, 2015 approving the shifting of Registered Office of the Company to Mumbai, State of Maharashtra. The new address of the Registered Office of the Company is "IN Centre, 49/50, M.I.D.C., 12th Road, Andheri (East), Mumbai - 400 093, Maharashtra, India. 6 MANAGEMENT DISCUSSION AND ANALYSIS: Management discussion and Analysis Report is provided separately in the Annexure A forming integral part of this Report. 7 VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has adopted Whistle Blower and Vigil Mechanism policy for Directors and Employees of the Company. The Company has established a secured system to enable Directors and Employees to report their genuine concerns, generally impacting / affecting business of our Company, including but not limited to improper or unethical behavior / misconduct / actual or suspected frauds / violation of Company's code of conduct. All protected disclosures concerning financial or accounting matters should be addressed, in writing, to the Chairman of the Audit Committee of the Company for investigation. In respect of all other protected disclosures, those concerning the Ombudsman and employees at the levels of senior Vice President and above should be addressed to the Chairman of the Audit Committee of the Company and those concerning other employees should be addressed to the Ombudsman of the Company. The Ombudsman may refer the matter to the Chairman of the Audit Committee depending upon the importance of the matter. Further details are posted on the website of the Company www.gulfoilindia.com 8 PUBLIC DEPOSITS: The Company has not accepted any deposits during the year from the Public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. 9 RESEARCH & DEVELOPMENT: Company's Research & Development (R&D) and quality control facility located at Silvassa has comprehensive testing facilities for testing and development of automotive and industrial lubricants. It is staffed with well qualified & experienced scientists and technologists for development of product formulations. Although Company receives global product formulations from Gulf Oil International under the license agreement, the R&D Centre located at Silvassa adopts the global product formulations based on local raw materials and operating conditions meeting the specific needs of local OEM's and lubricants market in India. 10 SUBSIDIARIES: The Company does not have any subsidiary as on March 31, 2015. 11 HUMAN RESOURCES / INDUSTRIAL RELATIONS, ESOP SCHEME: The Company successfully grew its talent acquisition, retention and development plans during the year, Cordial industrial retention and low absenteeism contributed to higher output levels. The focus on employee development and efforts to enhance competency levels through training programs continued. Detailed information on this section has been provided in the "Management Discussion and Analysis in the Annexure A, which is forming integral part of this Report. 12 DISCLOSURE UNDER PREVENTION OF SEXUAL HARASSMENT POLICY: During the year under review and post completion of demerger process, the Company adopted Prevention Of Sexual Harassment (POSH) policy. A separate internal Committee has been constituted under the policy. No complaints were received under POSH during the year ended March 31, 2015. 13 REMUNERATION POLICY: The Board has adopted a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and senior Management of the Company. The policy also lays down the criteria for selection and appointment of Board members. The details of the policy are provided in the Annexure F to this Report. 14 CORPORATE SOCIAL RESPONSIBILITY INITIATIVES AND PROGRAMS: Post de-merger, the Company constituted a Corporate Social Responsibility (CSR) Committee on June 6, 2014. The Company has initiated activities under CSR initiatives in the area of education, rural development and promoting health care in and around its area of operations and local area at Silvassa, DNH. These projects are in accordance with schedule VII of the Companies Act, 2013 and Company's CSR policy. A report on CSR activities as required under Companies (Corporate social responsibilities Policy) Rules, 2014 is set out in Annexure B forming part of this Report. This being the first year of separate operations for the Company and in order to stabilize the operations under a new listed entity w.e.f. its listing on July 31, 2014, the Board has not been able to spend full CSR amount as contemplated in the guidelines and has taken up various steps to identify additional CSR projects to meaningfully spend full amount under CSR in the coming years. 15 DIRECTORS: During the year under review, the Board of Directors, on recommendation of Nomination and remuneration committee, appointed Mr. Ravi Chawla as Managing Director of the Company for a period of 3 years effective from June 6, 2014. All independent Directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing agreement. Pursuant to the Scheme of Arrangement between Gulf Oil Corporation Limited (the Demerged Company) and your Company (Resulting Company), the Board was reconstituted on May 29, 2014 by appointing Mr. Sanjay G. Hinduja, Mr. Ramkrishan P. Hinduja, Mr. M.S. Ramachandran, Mr. Ashok Kini and Mrs. Kanchan Chitale as Directors of the Company and thereafter Mr. S. Pramanik and Mr. T. T. Das have resigned on June 14, 2014 as directors of the Company. At the ensuing Annual General Meeting of the Company to be held on September 22, 2015, Mr. Ramkrishan P. Hinduja, (Director) will retire by rotation. Mr. Ramkrishan P. Hinduja has not offered himself for re-appointment due to understandable pre-occupations and the vacancy caused by retirement by rotation of Mr. Ramkrishan P. Hinduja, will not be filled up at the ensuing Annual General Meeting to be held on September 22, 2015 or any adjournment thereof. The Board placed on record its appreciation of contributions made by him during his tenure. KEY MANAGERIAL PERSONNEL: During the year under review, the Board of Directors at their meeting held on June 6, 2014 have appointed Key Managerial Personnels namely, 1) Mr. Ravi Chawla, Managing Director, 2) Mr Manish Kumar Gangwal, Chief Financial Officer and 3) Mr Vinayak Joshi, Company Secretary and Compliance Officer. 16 BOARD EVALUATION: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing agreement, a Board evaluation process was completed through a process of structured questionnaire and taking into consideration various aspects of the Board's functioning, composition, culture, obligation and governance. The Board of Directors expressed their satisfaction with the evaluation process. 17 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required pursuant to section 134(3) of the companies Act, 2013 read with rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure C and forming integral part of this Report. 18 INFORMATION ON STOCK EXCHANGES: The Company's equity shares are listed on BSE Limited (Designated Exchange) and The National Stock Exchange of India Limited with effect from July 31, 2014. 19 CORPORATE GOVERNANCE: As per Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance together with compliance certificate issued by Practicing Company Secretary are given separately in Annexure F forming an integral part of this Report. 20 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013: The details of Loan, Guarantees and Investments outstanding as on March 31, 2015 under Section 186(4) of the Companies Act, 2013 are provided in Note 11 and 25 to the Financial Statements. 21 MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN MARCH 31, 2015 AND JULY 28, 2015 (DATE OF THE REPORT): There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2015) and the date of the Report (July 28, 2015). 22 RISK MANAGEMENT POLICY: The details of development and implementation of Risk Management Policy for the Company are given in Annexure A, forming part of this Report 23 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The details of internal control System and their adequacy are mentioned in the "Management Discussion And Analysis" enclosed as Annexure A, forming part of this Report. 24 MEETINGS: The details of number of meetings of the Board held during the Financial year 2014-15 are provided in Corporate Governance Report. 25 RELATED PARTY TRANSACTIONS: All related party transactions were placed before the Audit Committee and the Board for their approval. Omnibus approval was obtained on a yearly basis for transactions which were of routine and repetitive nature. The transactions entered into pursuant to omnibus approval were placed before the Audit Committee and Board on quarterly basis. The policy on Related party transactions as approved by the Board of Directors has been uploaded on the website of the Company, www.gulfoilindia.com/upload/pdf/ policy-on-materiality-and-dealings.pdf. Pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounting) Rules, 2014 there were no material transactions, contracts or arrangements entered with Related Party as on March 31, 2015. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company. A statement showing Related Party Transactions entered during the year is given under Note 31 to the Financial Statements. 26 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: There were no significant and material orders passed by the Regulators /Courts that would impact the going concern status of the Company and its future operations. 27 DIRECTORS RESPONSIBILITY STATEMENT: To the best of our knowledge and belief and according to the information and explanations obtained by us , your Directors make the following statements in terms of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the Board had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; c) the Board had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) the Board had prepared the annual accounts on a going concern basis; and e) the Board had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and f) the Board had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 28 AUDITORS INCLUDING COST AUDITORS, SECRETARIAL AUDITOR: M/s Price Waterhouse, Chartered Accountants (Firm Registration No. 301112E) who are the Statutory Auditors of the Company hold office up to the ensuing seventh Annual General Meeting. The Audit Committee and the Board of Directors have recommended their re-appointment for the financial year 2015-16. The necessary resolution is being placed before the Members for approval. As required under the provisions of section 139 and 141 of the Companies Act, 2013, the Company has obtained written confirmation from M/s Price Waterhouse, that their appointment, if made, would be in conformity with the limits specified in the said section. Cost Auditors: As per the requirements of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records relating to Lubricants business. The Board, on recommendation of Audit Committee, has appointed M/s Dhananjay V. Joshi & Associates, Cost Accountants (Firm Registration No.000030), as Cost Auditors of the Company to audit the cost records of the company for the financial year 2015-16 for a remuneration of Rs.2,25,000 (Rupees Two Lacs Twenty Five Thousand only )plus service tax as applicable and reimbursement of out of pocket expenses . As required, under the Companies Act, 2013, a resolution seeking Members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the seventh Annual General meeting of the Company. Secretarial Auditor: Pursuant to section 204 of the Companies Act, 2013 and rules made thereunder, the Company has appointed M/s BS & Company, Company Secretaries LLP (Firm Registration No AAE-0638.) to carry out secretarial Audit of the Company. The secretarial audit Report enclosed as Annexure D and forming integral part of this Report. There is no audit qualification for the year under review. 29 EXTRACT OF ANNUAL RETURN: The details of extracts of Annual Return in Form MGT-9, as required under section 92 of the Companies Act, 2013 are enclosed as Annexure E and forming integral part of this Report. 30 PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES: In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure forming part of the Annual Report. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure forming part of the Annual Report. Having regard to the provisions of Section 136(1) read with its relevant provisions of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost. 31 ACKNOWLEDGEMENT: Your Directors thanks the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them to your Company. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company. For and on behalf of the Board Sanjay G. Hinduja Chairman (DIN: 00291692) Place: Mumbai Date: July 28, 2015 |